Cryptoverse: Busy Bitcoin Gives Birth to New Kind of Cryptocurrency

May 23 (Reuters) – Things are heating up over the Bitcoin blockchain.

The number of single-day transactions soared to a record 682,000 this month, up nearly 40% from the previous peak in 2017, according to Glassnode data. Bitcoin’s dominance, or share of the total $1.16 trillion cryptocurrency market, has grown to 44. %, up from 38% at the beginning of the year.

what happened?

BRC-20 is the first class of cryptographic tokens to be built on the Bitcoin blockchain, in addition to Bitcoin itself. Nearly 25,000 experimental coins have already been minted this year, and trading volumes have exploded.

“The BRC-20 token is a phenomenon that has never been seen before,” said Gordon Grant, co-head of trading at Genesis Trading.

Largely due to the creation of these tokens, the average number of transactions per day over the seven days exceeded 531,000, almost double from a month ago, according to data from Blockchain.com.

This new kind of cryptocurrency, like memecoins, has no concrete uses other than speculation. However, its early popularity not only as a store of value and method of payment, but also as a basis for developing new coins and applications that were previously considered the more modern realm of blockchains such as Ethereum and Solana. It shows that interest in Bitcoin is growing.

According to market insiders, some investors and developers have been skeptical following the cryptocurrency carnage following the collapse of high-profile companies like FTX and a general flight from riskier assets. We see the Bitcoin blockchain as a more secure long-term foundation for creating tokens and applications.

Alex Miller, CEO of Bitcoin developer Network Hiro, said, “People see what other blockchains can do and want to make it happen with Bitcoin. The coin has a track record that people can trust.”

Still, the BRC-20 frenzy is rocky.

According to tracker BRC-20.io, the total value of these tokens traded on the secondary market, especially on decentralized exchanges, exceeded $1 billion in early May, but has since fallen to $446 million. bottom.

SATOSHI engraving

Bitcoin’s blockchain, unlike Ethereum and Solana, was not originally developed to support the crypto ecosystem, so the BRC-20 token was created using ordinal theory and each Satoshi (Bitcoin data can be written to the smallest face value of , i.e. 1 in 100 million.

“When it comes to BRC-20 tokens and ordinals, there isn’t much utility,” said CJ Reim, a contributor at blockchain firm CoreDAO, but in terms of interest in building products on the Bitcoin blockchain. sees this trend as “promising”.

The race to create these new coins has not had a significant impact on Bitcoin’s price, which has been trading below $30,000 since mid-April.

The rapid creation of BRC-20 tokens was not without controversy, and the issuance of these tokens made it more difficult for users who wanted to use Bitcoin for its intended purpose, critics say.

“Gas” fees, or the cost of transactions on the Bitcoin blockchain, have skyrocketed over the past month, with total dollar-denominated fees paid per day reaching a record high of $17.8 million per day, according to Glassnode data. value has reached near.

Data from Blockchain.com shows median transaction fees jumped to $30.91 from January to May 1, compared to a range of 90 cents to $4.23.

The network has also slowed considerably. Due to the congestion, the world’s largest crypto exchange Binance had to suspend Bitcoin withdrawals on May 7.

“Though congestion has eased somewhat, it’s still congested, and at peak times, users wait until their transactions are confirmed,” said Naumann Sheikh, head of financial management at Wave Digital Assets, a digital asset investment manager. I’ve been waiting for over 30 hours,” he said.

“This pushes the boundaries of Bitcoin technology.”

Reported in Bangalore by Lisa Matakkal and Meda Singh.Editing: Pravin Char

Our standards: Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News as committed to honesty, independence and freedom from bias based on trust principles.